Thrifty Thinking: Financial Four

As the NCAA college basketball tournament gets underway, millions of Americans face the challenge of prioritizing their brackets. With the Financial Four, people can get a clear picture on how to prioritize their fiscal goals, and expert financial planners and advisors are weighing in on what Americans should be thinking about as their top priorities in 2016.

The National Endowment for Financial Education® (NEFE®) and the Financial Planning Association® (FPA®) are partnering on the fifth annual Financial Four (www.financialfour.org), an interactive bracket of 32 concepts that helps users identify the financial areas that are most important to them.

“It can be overwhelming to prioritize all of the things you need to accomplish to keep your financial life in order. The Financial Four provides clarity and gives people a visual way to rank and arrange their financial responsibilities,” says Ted Beck, president and CEO of NEFE. “The best thing is that there aren’t any upsets in this bracket.”

Experts identify their Financial Four

From establishing an emergency savings to improving open communication about finances with family members, financial advisors-turned-bracketologists logged on to www.financialfour.org and ranked the top priorities that Americans should focus on this year. Based on their voting results, here is the 2016 Financial Four:

1. Start Saving Early. One of the best and easiest ways to save money is to pay yourself first. Every time you receive a paycheck, save a certain percentage before spending on anything else. Remember the time value of money. The earlier you start saving and planning for the future, the further ahead you will be in the long run.

2. Use credit responsibly. To ensure that you have a good credit report, always pay your bills on time and try to limit usage to one credit card. It’s a good idea to check your credit report once a year to ensure accuracy.

3. Live Within Your Means. Spending less than you earn and living within your income allowance is the best way to ensure you meet your financial goals. Evaluate your habits and recognize where your money goes. Start by jotting down everything you think you spend money on during a one-month period. Next, make a list of what you actually spend during that month. This will help you track your spending.

4. Rein in Debt. Your goal: to have less than 15 percent to 20 percent of your income earmarked for debt payments—excluding mortgage debt. If you pay more than this, you’re in the danger zone and possibly in over your head with debt. Create a get-out-of-debt plan, cut expenses and limit access to credit cards.

What is your Financial Four? Complete your own bracket at www.financialfour.org. And prioritizing your financial goals is just the first step. For resources, tools and encouragement on successfully managing your finances, visit www.smartaboutmoney.org.

About the Financial Four

The Financial Four, a joint project of the National Endowment for Financial Education (NEFE) and the Financial Planning Association (FPA), is designed to help people identify their top financial priorities. The interactive bracket allows users to rank each topic until they advance their selections to the top choice. To complete the bracket online, visit www.financialfour.org.

 

About the National Endowment for Financial Education (NEFE)

NEFE is a nonprofit foundation that inspires empowered financial decision making for individuals and families through every stage of life. For more information, visit www.nefe.org.

 

About the Financial Planning Association

Since 2000, the Financial Planning Association® (FPA®) has been the principal professional organization for CERTIFIED FINANCIAL PLANNER^TM (CFP®) professionals, educators, financial services professionals and students who seek advancement in a growing, dynamic profession. More than 23,000 FPA members adhere to the highest standards of professional competence, ethical conduct and clear, complete disclosure to those they serve. Through a collaborative effort to provide members with One Connection^TM to tools and resources for professional education, business success, advocacy and community, FPA has become an indispensable force in the advancement of today’s CFP® professional. Learn more about FPA at OneFPA.org.